China's investment in property development over the first eight months of the year dropped 7.4% year-on-year to CNY9.08 trillion, showing a heightened downward pressure on the sector as real estate developers continued to struggle with liquidity and project delivery issues. But signs of a mild recovery have emerged, as a number of measures have been rolled out across the country to boost housing demand, and as the government's swift plan to restart stalled property projects gradually took effect to stabilize market confidence, analysts said. They noted that China's property market will maintain stable operation and won't pose systematic financial risks to the world's second-largest economy. Over the first eight months of 2022, residential property investment plunged 6.9% year-on-year, according to data released by the National Bureau of Statistic (NBS) on Friday.
Sales of commercial housing in terms of area and revenue dived 23% and 27.9% year-on-year in the January-August period respectively, NBS data showed, narrowing 0.1 and 0.9 percentage points from the first seven months. Among 70 large and medium-sized Chinese cities, 50 recorded price drops from July for new homes, and 56 reported price declines for second-hand homes, an increase of 10 cities and 5 cities from July, respectively. In August, new home prices in first-tier cities rose 0.1% on a monthly basis, while second-hand house prices remained unchanged from July. Observers said that the August data underscore the urgency to stabilize property investment and prevent the index from derailing China's overall fixed-asset investment. “Due to a strained capital pool, real estate developers lack the incentive to purchase land and start new projects, and stimulus should emphasize these two fronts,” Yan Yuejin, Research Director at Shanghai-based E-house China R&D Institute, told the Global Times.
According to Yan, the reduced drop in property sales in August provided a positive sign as it points to a recovery on the demand side amid the government's ongoing house easing measures. “Revived demand also indicates that property sales will continue improving and house prices won't fall off a cliff in the following months,” he said. Various local governments have issued at least 70 stimulus measures as part of efforts to defuse market risks and tackle the issue of unfinished residential projects. China's Ministry of Housing and Urban-Rural Development, together with the Ministry of Finance and the People's Bank of China (PBOC), the country's central bank, have launched special measures to support cities seeking to address the construction and delivery of stalled residential projects by rolling out special loans offered by the country's policy banks. So far, at least 10 cities have introduced policies such as bailout funds to stabilize local property markets and boost market confidence, the Global Times reports.
